The financial crisis changed how people spend money — and corporate America is having trouble figuring it out

Over the weekend, Business Insider's Bob Bryan
highlighted the chorus of CEOs from some of America's biggest
companies who think the economy is just so-so, or even worse.

Companies as varied as BlackRock, Starbucks, and McDonald's
issued cautious outlooks on consumers during the second-quarter
earnings season. And then on Wednesday, Target
said it was planning for a "challenging environment in the
back half of the year."

Target also reported that same-store sales fell 1.1% in the
second quarter, its first
drop in this measure since the first quarter of 2014. Target
shares fell by as much as 6% in early trading on Wednesday.

After last week's July
retail sales report — which showed no increase in spending
since the prior month — a downbeat view from a retailer like
Target shouldn't come as a complete surprise.

The following chart, which comes to us from Deutsche Bank's
Torsten Sløk, shows that since the financial crisis, traditional
retailers are fighting not just habit-changing companies like
Amazon but also an entire generation of scarred consumers who
really just remember one thing: the financial crisis.

Deutsche
Bank

The headline on the chart indicates that a preference for saving
presents something like a puzzle for the economy. And indeed,
economists would expect wealthier, employed consumers to
spend rather than save.

But it seems clear, almost a decade after the financial crisis,
that this event changed consumers' view on what they do and don't
need to be prepared for. Namely: the worst.

And this impact is perhaps seen no more clearly than in the
preference among young people to save rather than spend their
money, as we see in this table from Sløk:

Deutsche
Bank

This is not to say, however, that consumers are thought to have
begun seizing up and that the economy is grinding to a halt.

So it isn't, then, that consumers don't want to spend money, or
can't spend money, or aren't spending money, but rather that the
psychology around where and when and how people spend money is
changing in a way that is puzzling corporate America.

Consumers are spending money in new places and on new things —
Uber, Spotify memberships, and Netflix —
instead of at malls.

And when asked whether they would like to keep spending more
money, it seems consumers are saying no. And that is perhaps the
biggest challenge of all.